(Bloomberg) -- The global artificial intelligence frenzy is prompting local Chinese investors to pile into shares of Taiwan's Foxconn Industrial Internet Co., instead of home-grown companies.
The AI server maker, controlled by Taiwanese billionaire Terry Gou's Hon Hai Precision Industry Co., has seen its stock more than double in Shanghai since mid-January. Its performance this year beats all others on the benchmark CSI 300 Index and compares with a drop of more than 9% in the mainland chip-making leader Semiconductor Manufacturing International Corp.
Goldman Sachs Group Inc. raised the price target of Foxconn Industrial by 12% on March 9 — implying 30% upside from Friday's close — as it expects the company to benefit from demand for AI servers. The firm is expected to report results on Wednesday.
Interest in artificial intelligence has sparked a surge in chip stocks in the US and Taiwan this year, with bets increasing following Nvidia Corp.'s strong earnings last month. Foxconn Industrial is one of the few Taiwanese semiconductor companies listed in the mainland.
“We see 2024 as a year of recovery with AI servers riding on strong market demand with the first full-year contribution,” Goldman analysts including Verena Jeng wrote in a note. Jeng also expects to see a recovery in the shipment of servers in general as part of a new product cycle.
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